Global banking regulators have adopted tougher capital requirements in response to the financial crisis, and are now turning their attention to secondary issues, such as leverage and funding requirements, a new report finds.
The Basel Committee on Banking Supervision on Monday issued its tenth progress report on adoption of the new capital adequacy framework, known as Basel III, which aims to bolster the resilience of the global banking system in the wake of the 2008 crisis.
Overall, the report finds that 27 of the countries that it reviewed have now adopted final risk-based capital rules, liquidity regulations and capital conservation buffers. Additionally, 24 jurisdictions have issued final rules for countercyclical capital buffers that aim to combat the impact of the credit cycle on banks’ capital position.
All of the countries that have global systemically important banks (G-SIBs) now have a dedicated regulatory framework in effect for these firms, the report finds, and 23 countries have at least issued draft rules for their domestic systemically important banks (D-SIBs).
National regulators and policymakers are now turning to the implementation of other Basel III standards, the report notes, including the leverage ratio and the net stable funding ratio (NSFR). The Basel III regime is slated to become effective by 2019.
For Canada in particular, work is complete on the revised capital standards, capital conservation buffers, liquidity and leverage ratios, and D-SIB requirements, the report finds.
The work that remains incomplete includes more detailed rules on the countercyclical buffer, requirements for equity investments in funds, a securitisation framework, and capital requirements for central counterparties. Additionally, the NSFR requirements, and disclosure requirements for both the NSFR and leverage ratios remain a work in progress.